Gaze pitches to Europeans

By Deborah Hill Cone

Thursday 8th April 2004

David Gaze might be classed as a tax exile he's been domiciled in London for two years but in spite of being so far away he is doing his bit for the New Zealand economy.

The property entrepreneur behind project management company Gaze Commercial is on an almost patriotic mission to bring potentially hundreds of millions of dollars of European investment to this country.

This month he is launching the South Pacific Property Fund, the first sterling-denominated limited liability property fund.

Mr Gaze believes the commercial property sector in New Zealand has a compelling investment story for UK investors.

He is pitching to European institutions from his Mayfair base, with the aim of encouraging them to place their money here through the new fund, which offers an income yield of 7.5% for 10 years on investments of over £250,000.

Former High Commissioner to London Paul East QC, actuary Jonathan Ericksen (former head of the Mercer Group), AmTrust CEO Peter Wall and property sector figure Rick Ellis make up the fund's investment committee.

Mr Gaze's argument is that it makes sense for European investors to capitalise on a window of opportunity to invest in New Zealand, where property yields are outperforming most other classes of asset in the UK. In this country there is a yield gap, a couple of percentage points between co mmercial property yields an average of 9-10% and the cost of borrowing at about 6.75%.

The other plank to SPPF's pitch is that growing superannuation funds in Australia and New Zealand will be investing a proportion of their cash in commercial property, which will drive yields down and drive prices up.

As a bonus, New Zealand does not have a capital gains tax.

Mr Gaze also buys into the "Switzerland of the South Pacific" angle, saying the safe-haven aspect and political stability of this country is likely to become of increasing value to international investors.

"Long term, there is no country you could say was as safe as New Zealand we underestimate that," Mr Gaze said.

The launch comes at a time the Economist and other commentators are predicting a property crash in Australia but Mr Gaze is not deterred by that.

'I'm not disagreeing with [the Economist's] comments. If you look at residential factors in Australia the market is overheated, as are New Zealand residential factors, especially apartment-wise."

But he said there was a lot of Australian money coming into the New Zealand commercial market as a result.

More than $880 million was invested in New Zealand commercial property last year, including $680-odd million from Australia, coming from big players such as ING and AMP, but little came from European investors.

"The window is here for a year to 18 months globally, interest rates are increasing."

Mr Gaze started his career as a property developer 26 years ago, listed his company Gaze Commercial in the late 1980s and then privatised it again in 1988. He has diverse interests, including a UK-based organic food business, a London patisserie, a property operation investigating business opportunities in Latvia, Lithuania and Estonia and a UK business marketing Mi-Pod student accommodation.

Mr Gaze said he had cashed up much of his New Zealand property assets to raise capital for his new projects but still owns luxury lodge and winery Omata Estate in the Bay of Islands.

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